Companies

Groupe PSA’s aftermarket plunge could help the company as also the aftermarket growth

G Balachandar Chennai | Updated on October 05, 2020

Groupe PSA’s entry into the Indian auto aftermarket business could become a game-changer for the French auto major. Not only can it potentially help it garner sales beyond key cities but also accelerate the movement of numerous unorganised aftermarket players towards organised play.

Also read: France’s Groupe PSA announces entry into aftermarket biz in India

Recently, the company announced the launch of its Eurorepar range of multi-brand, high quality aftermarket products in India ahead of the introduction of its first vehicle — Citroën C5 Aircross SUV — in Q1 of 2021.

Multi-brand strategy

While the company-owned dealerships are key to its aftermarket support in the Indian passenger vehicle market, PSA sees its Eurorepar multi-brand strategy with a sales and distribution tie-up with GoMechanic as an innovative one.

“One of the big hurdles for a new OEM entering India is the effort required to establish a network for servicing vehicles which, given the huge expanse of India, continues to be a key deciding factor for consumers,” said Ashim Sharma, Partner and Group Head, Business Performance Improvement Consulting at Nomura Research Institute.

GoMechanic tie-up

So, the Europepar introduction in India will pave the way for a wider service and spares network which could complement the initial sales and spares sales network of PSA. The GoMechanic tie-up will take care of both services and spares across large parts of the country.

“The tie-up could be a good catalyst for driving sales even outside the key cities. Given the pandemic and the associated economic gloom, it would also lower investments for dealers with they having to set up fewer service facilities; in some cases, only sales facility instead of a 3S facility would lower investments needs significantly,” pointed out Sharma.

Also read: TVS Automobile partners Google Cloud to build 'super platform' for aftermarket

Apart from benefiting PSA, Euruorepar may also accelerate the ongoing transformation in the Indian auto aftermarket.

“Given the highly fragmented aftermarket networks in the unorganised sector there is certainly potential for organised players to come in and cater to the older UIO (units in operation) across OEMs,” said Sharma.

In the last several years, only one company — TVS Automobile Solutions — has been bringing several thousands of retailers, garages and small distributors across the country under an organised platform and also empowering them with digital technologies.

The Indian independent automotive aftermarket (both organised and unorgamised) is estimated at about $10 billion and has been growing at a CAGR of 7-10 per cent in the past five years.

Published on October 05, 2020

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